Related Questions

Key Takeaways:

• Crypto buybacks occur when a project uses its revenue to purchase its own token from the open market.
• This mechanism creates immediate buying pressure and usually leads to the tokens being burned to reduce supply permanently.
• Investors prefer buybacks over dividends because they are often more tax-efficient and directly support the token price.

Crypto buybacks are the blockchain equivalent of one of Wall Street’s favorite tools: the stock buyback. In the traditional market, companies like Apple use their excess cash to buy their own shares, reducing the number of shares available and boosting the price for everyone else.

In the digital asset world of 2026, profitable protocols are doing the exact same thing. Instead of letting cash sit idle in a treasury, they are returning value to their community.

This mechanism changes the narrative of a token from a "speculative asset" to a "productive asset." It proves that the project is generating real revenue and is committed to supporting its own economy.

How Do Crypto Buybacks Work?

The process is transparent and automated. First, the protocol generates revenue. This could be from trading fees on a decentralized exchange (DEX) or interest payments on a lending platform.

Once the treasury collects these fees, a smart contract triggers a purchase order. The protocol goes to the public Spot market and buys a specific amount of its own token.

After the purchase, the tokens are usually sent to a "burn address." This removes them from circulation forever. The result is two-fold: immediate buying pressure on the chart and a permanent reduction in the circulating supply.

Why Are Buybacks Better Than Dividends?

You might ask why the project doesn't just distribute the cash to holders as a dividend. The answer often comes down to taxes and regulation.

In many jurisdictions, receiving a dividend is an immediate taxable event. You have to pay income tax on it the moment it hits your wallet. Crypto buybacks, however, increase the value of the token itself.

This results in "capital appreciation" rather than "income." In many countries, you only pay tax on capital gains when you actually sell the token. This makes buybacks a much more efficient way to grow wealth for long-term holders.

Which Projects Are Famous for Buybacks?

The most famous example is Binance and its BNB token. Every quarter, the exchange uses a portion of its profits to buy back and burn BNB.

In the DeFi sector, MakerDAO is the pioneer. The protocol uses the stability fees generated by its stablecoin loans to buy back the MKR token. This links the success of the DAI stablecoin directly to the value of the MKR governance token.

Is This Market Manipulation?

Critics sometimes argue that crypto buybacks artificially inflate the price. However, in regulated markets, this is considered a standard corporate action, not manipulation.

As long as the buyback is announced in advance and executed transparently on-chain, it is a legitimate use of funds. It signals confidence. The team is essentially saying that they believe their own token is undervalued at current prices and is the best investment they can make.

Conclusion

When analyzing a new investment, always look for the path to value accrual. Crypto buybacks are the clearest signal that a project is financially healthy and aligns its incentives with yours.

Key Takeaways:

• Deflationary tokens have a supply that decreases over time, creating natural upward pressure on price if demand stays constant.
• This is the opposite of inflationary fiat currencies like the US Dollar, which lose purchasing power every year.
• Projects achieve deflation through buybacks, transaction fee burns, or halving schedules that reduce new issuance.

Deflationary tokens are the economic opposite of the money in your bank account. In the traditional financial world, central banks print trillions of new dollars every year. This increases the supply and lowers the value of every dollar you save.

In the crypto economy of 2026, investors are tired of losing purchasing power. They are flocking to assets that are programmed to get scarcer, not more abundant.

By investing in an asset where the supply mathematically shrinks, you are betting on the laws of supply and demand. If the pie gets smaller, your slice of the pie gets more valuable, even if you never buy another token.

What Makes a Token Deflationary?

A token is considered deflationary if its total circulating supply decreases over time. There are two main ways deflationary tokens achieve this.

The first is "Burning on Transaction." Some meme coins and DeFi protocols engage a tax (e.g., 1%) on every transfer. That 1% is sent to a dead wallet. The more people trade the token, the faster the supply vanishes.

The second is "Buyback and Burn." This is common with exchange tokens like BNB or MKR. The project uses its real-world profits to buy tokens off the market and destroy them. This links the success of the business directly to the scarcity of the asset.

Is Bitcoin a Deflationary Token?

This is a common point of confusion. Technically, Bitcoin is disinflationary, not deflationary.

The supply of Bitcoin is still increasing. Miners produce new coins every 10 minutes. However, the rate of inflation drops every four years due to the Halving.

Eventually, in the year 2140, Bitcoin will hit its hard cap of 21 million. Until then, while it is infinitely harder than fiat currency, it does not strictly fit the definition of deflationary tokens that actively reduce their supply today.

Why Is Ethereum Called Ultrasound Money?

Ethereum is the prime example of a modern deflationary asset. Since the EIP-1559 upgrade, the network burns a portion of the gas fees paid for every transaction.

During bull markets when network activity is high, the amount of ETH burned is often higher than the amount of new ETH paid to stakers. This results in a "Net Deflationary" issuance.

This narrative, dubbed "Ultrasound Money," suggests that ETH is superior to "Sound Money" (Gold/Bitcoin) because the supply isn't just capped; it is actively shrinking.

What Are the Risks of Deflation?

While deflationary tokens sound perfect for investors, they can be bad for users. If a currency becomes too valuable, people stop spending it.

This is the "Deflationary Spiral." If you think your token will be worth 10% more tomorrow, you won't use it to buy coffee today. You will hoard it.

For a currency to function, it needs velocity (movement). This is why most deflationary assets function better as "Store of Value" investments rather than day-to-day payment currencies.

Conclusion

In a world of infinite fiat printing, scarcity is the ultimate luxury. Deflationary tokens offer a mathematical shield against the erosion of wealth.

Key Takeaways:

• Burning is the irreversible act of sending cryptocurrency to a "null address" that no one can access.
• Projects utilize token burning to create artificial scarcity, which can theoretically drive up the price of the remaining tokens.
• Mechanisms like EIP-1559 on Ethereum automatically burn a portion of transaction fees to offset inflation.

Token burning is a concept that sounds insane to a traditional banker. Why would anyone intentionally destroy money? In the physical world, burning cash is illegal and illogical.

But in the cryptocurrency economy of 2026, it is one of the most powerful tools for value creation. It acts as a deflationary force, counteracting the inflation of mining rewards.

By permanently removing assets from the circulating supply, a project can reward its long-term holders without actually paying them a dividend. It is the digital equivalent of a stock buyback, but faster and transparent on the blockchain.

How Does the Burning Process Work?

You might picture a digital fire, but the reality of token burning is more technical. To burn a token, you send it to a "Null Address" (also known as an Eater Address).

This is a wallet address that was generated without a private key. Because there is no key, the funds sent there can never be accessed or spent again.

Once the transaction is confirmed on the blockchain, the tokens are subtracted from the total supply. They still exist on the ledger as a record, but they are effectively dead capital.

Why Do Projects Burn Tokens?

The primary motivation is supply and demand. If demand remains steady while the supply decreases via token burning, the price per unit should mathematically rise.

Many exchanges and projects, like Binance with BNB or MakerDAO, use a portion of their profits to buy back tokens from the open market and burn them. This returns value to the investors. If you hold the token, your slice of the pie gets slightly bigger every time a burn happens, simply because the total pie got smaller.

How Does Ethereum Use Burning?

The most famous example of this mechanism is Ethereum. Following the EIP-1559 upgrade years ago, the network began burning a portion of every gas fee paid by users.

During periods of high network activity, token burning on Ethereum can outpace the issuance of new ETH to stakers. This turns Ethereum into a "deflationary" asset. Instead of the supply growing every year like the US Dollar, the supply of ETH can actually shrink, making it scarcer over time.

What Is Proof-of-Burn?

Beyond economics, burning can also be used for security. "Proof-of-Burn" is a consensus mechanism used by some niche blockchains.

Instead of mining with electricity (Proof-of-Work) or locking up capital (Proof-of-Stake), miners demonstrate their commitment to the network by destroying coins. The more they burn, the higher their chance of being selected to validate the next block. It is a way to buy virtual mining power by sacrificing immediate wealth.

Conclusion

Scarcity is the ultimate value driver. Token burning provides a verifiable, transparent way for projects to prove they are committed to protecting the value of their currency.

Key Takeaways:

• New York has the strictest crypto regulations in the United States due to the "BitLicense" framework.
• Residents are limited to a small list of pre-approved exchanges and often cannot access popular new altcoins.
• Using VPNs to bypass these restrictions is risky and can lead to permanent account bans and frozen funds.

If you are trying to buy crypto in New York, you have likely realized that it feels like living in a different country compared to the rest of the United States. While your friends in Texas or Florida are trading the latest meme coins on almost any app, New Yorkers are often met with "Service Not Available" screens.

This is not an error. It is the result of the BitLicense. New York is the financial capital of the world, and its regulators have decided to take the most aggressive stance on digital asset safety.

Navigating this landscape in 2026 requires patience. You cannot simply sign up for any platform you see advertised on Twitter. You have to play by a specific set of rules designed by the New York State Department of Financial Services (NYDFS).

What Is the BitLicense?

The BitLicense is a special business license issued by the NYDFS for virtual currency activities. Introduced in 2015, it set a rigorous standard for operating in the state.

To get this license, a company must undergo deep audits of their capital reserves, cybersecurity, and anti-money laundering protocols. Because this process is incredibly expensive and time-consuming, many exchanges simply refuse to do business in the state.

This limits your options. When you look to buy crypto in New York, you are choosing from a very short list of platforms that have survived this vetting process.

Why Are Some Coins Banned?

The restrictions don't just apply to the exchanges; they apply to the specific tokens too. Just because an exchange is legal in New York doesn't mean every token on that exchange is available to you.

Regulators maintain a "Greenlist" of approved coins. These are assets that have been deemed sufficiently decentralized and safe.

Often, high-risk DeFi tokens, algorithmic stablecoins, or privacy coins are blocked. This creates a frustrating experience where you might see a coin rallying globally, but you cannot buy crypto in New York to participate in that specific trend.

Can You Use a VPN to Bypass the Rules?

Many traders think they can outsmart the system by using a Virtual Private Network (VPN) to pretend they are in a different state. This is a dangerous game.

Exchanges are required by law to know their customers (KYC). They will ask for your ID and proof of address, like a utility bill. A VPN might hide your IP address, but it cannot hide your driver's license.

If an exchange catches you lying about your residency, they are legally obligated to freeze your account. You could end up with your funds locked indefinitely for violating the Terms of Service.

What About Stablecoins in NY?

Stablecoins are another friction point. The NYDFS has strict rules regarding reserves.

Historically, Tether (USDT) has faced scrutiny in the state, leading many platforms to only offer USDC or GUSD (Gemini Dollar) to New York residents. If you are looking to buy crypto in New York, be prepared to use regulated stablecoins rather than the offshore varieties common in other markets.

Conclusion

The regulatory wall around the Empire State is high, but it is built for safety. While it limits your freedom to ape into risky projects, it also means the platforms available to you are some of the most secure in the world.